“Economic Freedom of the World” Doesn’t Endorse Free Trade Agreements

As two of the principal authors of the Economic Freedom of the World (EFW) index published by the Fraser Institute, we might be accused of being overly defensive when it comes to criticisms of such indexes. For this reason, we typically choose to remain silent when such criticisms appear. However, Kevin Carson’s March 2011 article in The Freeman, “What Economic Freedom Indexes Leave Out,” demands correction.

Most of Mr. Carson’s attention is paid to our intellectual rival in the economic freedom index business, the Heritage Foundation’s Index of Economic Freedom, though many of his criticisms could apply equally to our index. Let us highlight just a few problems.

First, Mr. Carson writes in the opening paragraph that the Heritage Foundation reclassified the U.S. economy from “totally free” to “mostly free.” This is misleading at best. It is true that the Heritage index uses a labeling system that begins with “Free,” continues to “Mostly Free,” and then goes down to “Repressed.” But nowhere does the Heritage index say the U.S. is or ever was “totally free.” Even when the U.S. was labeled nominally free, the Heritage index was critical of various infringements against economic liberty conducted by U.S. authorities.

Second, Mr. Carson criticized the Heritage index for failing to support the contractual rights of workers when dismissed. This is just plain wrong. The applicable part of the Heritage index dealing with worker dismissal deals with government-imposed rules for notification and severance pay. Of course, the Heritage Foundation understands that contract enforcement is highly important for economic freedom! To suggest otherwise, as Mr. Carson does, is patently absurd. Mr. Carson’s ranting about the alleged violation of contractual rights among GM’s UAW workers is quite irrelevant. The fact is that whether the employee-employer relationship is at-will or subject to individual or collective (i.e., union) contract, the government has no place dictating the terms of these relationships.

Third, and most egregiously from our point of view, Mr. Carson claims that our EFW index “treats voting for anything called ‘a free trade agreement’ as a proxy for supporting free trade.” What?! This is completely false. The EFW index does not factor in anything related to the so-called free-trade agreements that the EU and U.S. authorities are attempting to negotiate. We have no idea how anyone who has read the report could reach such a conclusion!

Quite frankly, this willful disregard for simple facts on the part of Mr. Carson is baffling. More baffling is why The Freeman, a publication we respect and are proud to have written for ourselves, would publish such inaccurate work.

—Joshua Hall and Robert Lawson

Kevin Carson replies:

Based on my exasperatingly frequent tendency toward a photographic memory of things I’ve seen—coupled with the lack of any clear idea of where I actually saw them—I could swear I recall seeing a chart in the Fraser Institute’s Annual Report in which ratification of “free trade agreements” was taken as a proxy for freedom of trade. But try as I might, going through the Annual Report, I cannot find any such item. And almost six months after I finished writing my article, I’m afraid my original reading trail has gone completely cold. My only recourse, in this case, is a cheerful and ungrudging retraction—with sincere apologies—of my generalization regarding the Fraser Institute’s use of free trade agreements. I can only chalk it up to an evident misreading that I am presently unable to reconstruct—and freely admit that I should have done better.

So much for Messrs. Hall and Lawson’s third point. As for their first two, I believe it is they who are guilty of a misreading. Regarding the substance of the rest of the article, and my statements (which comprise the great bulk of the article) regarding the Heritage Foundation’s index, I stick by my guns. Taking in particular the first of Messrs. Hall and Lawson’s other two specific examples of my many alleged errors: Heritage’s Bill Beach explicitly referred, in the original John Stossel segment which drew the issue to my attention, to the United States being downgraded from “totally free” to “mostly free.” And Heritage is on record advocating two structurally important features of that statist economy: “intellectual property” and the national-security state. Whether “free” and “totally free” were intended literally, Mr. Beach’s and Heritage’s choice of language suggests a tendency to gloss over the degree of statism before Barack Obama.

The other example concerns the freedom of labor. Whatever Heritage’s position on the freedom of workers to leave the employment relationship, or on enforcement of workers’ contractual protections, its index mentions only the relative ease with which employers can get rid of workers. Its emphasis and point of view are entirely from the employer’s perspective, and the economic freedom of workers does not even arise as an issue.